Brazil Meet the Market - April 2015

MEET THE MARKET 2015
Ambassador Alex Ellis
< Picture to go here >
Inga Beale
CEO
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The Navigators Group, Inc.
Lloyd’s Meet the Market 2015
Rio De Janeiro
4/22/2015
Stephen Coward
President, Navigators Technical Risk
Joint Active Underwriter, Syndicate 1221
16th April 2015
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Navigators’ experience in Brazil
•
Co-location in Lloyd’s has had tangible benefits
 Sourcing business locally
 Strong trading relationships between people who are trusted friends
 Relatively low cost base
•
Reinsurance pricing conditions in Energy, Engineering & Marine have been
very challenging:
 Extreme over supply of capacity
 Low interest rates
 Premium rate reductions -10% to 25% in 2014; -5% to 30% expected in 2015
 Market share being sought by some players seemingly “at almost any price”
 New opportunities associated with PAC programme haven’t materialised
 Slow down due to 50% drop in oil price over past year
The Navigators Group, Inc.
5
Outlook
•
Short-term prospects (1-2 years) remain gloomy for underwriters
 Treaty & Facultative reinsurance trading conditions unlikely to turn
 Formation of Lloyd’s Consortia for Rio (pooling the capacity of several
Syndicates behind a single decision)
 Navigators is leading the first Rio consortium - Offshore Energy with
$100,000,000 capacity on behalf of Amlin, Aegis, Argo & Novae.
•
Mid-term (3-5 years hence) things should improve. Why?
 Pricing correction is inevitable
 Many players have combined ratios >100% which is unsustainable
 Beneficial fall out from Petrobras corruption scandal; radical changes to the
business model and practices are predicted
 Foreign investors and contractors will be active in a regulatory transparent and
compliant “new world”
The Navigators Group, Inc.
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The path to a brighter long-term outlook
•
Favourable outcomes will require
 Continued patience (on all sides of the trading relationship)
 Technical know-how (bringing worldwide reinsurance experience and knowledge
to Brazil)
 Consistency
 Economic & political stability
 A viable oil price (>$70/barrel) for the full exploitation and realisation of Brazil’s
enormous Oil & Gas cornerstone
 Persistence: committed and professional specialty reinsurers will not give up
easily!
Thank you & obrigado
The Navigators Group, Inc.
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The Brazilian Market
CONTENTS
• Shared Connections
• Allied World & Brazil
• Brazil’s Market Results
• Prospects for Brazil
• Brazilian Companies Overseas
• Closing Remarks
SHARED CONNECTIONS
• Economic – The number of investment projects
by Brazilian companies increased by 30% in the
last three years
• Trading - The UK’s trading relationship with
Brazil goes back over 200 years
• Cultural - British railway engineers introduced
Forró, the dance ‘fall all’ to Brazil
• Sport – Of the 3m 2014 World Cup tickets sold,
perhaps 66,000 were sold to Brits
ALLIED WORLD & BRAZIL
• We have been writing Brazilian business since
2002
• We service Brazilian business using Lloyd’s
Syndicate 2232
• We opened a Miami based Service Company,
with locally based underwriters, in 2014 to
service Latin American business
• Our premium is up 184% from 2010
ALLIED WORLD & BRAZIL
• We have a broad Direct & Facultative product
suite for Brazil and wider Latin America
Casualty
•
Excess &
Umbrella
Professional
Lines
•
Directors &
Officers
Property
•
Contractors
All Risks
•
General
Liability
•
Errors &
Omissions
•
Erection All
Risks
•
Workers
Compensatio
n&
Employers’
Liability
•
Single
Project
Architects
and
Engineers
•
General
Property
•
Mergers and
Acquisitions
Specialty
•
Aviation
•
Marine
Cargo &
Stock
Throughput
•
Marine
Liabilities
BRAZIL’S MARKET RESULTS
• Growth in the reinsurance market continues to
outpace the local primary market
Local Market Premium (BRL
bn)
90
80
83.9
78.5
70
66.2
60
50
40
58.2
50.5
30
20
10
0
2010
2011
Source: TerraReports – Terra Brasis Resseguros
2012
2013
2014
Ceded Reinsurance Premium
(BRL bn)
10
9
8
7
6
5
4
3
2
1
0
2.6
2.7
2.6
2.0
3.0
2.9
2.3
2.4
2.6
1.2
1.0
1.3
1.5
2010
2011
2012
Other Local Reinsurers
Foreign Insurers
2.7
2013
Ceded to IRB
3.5
2014
BRAZIL’S MARKET RESULTS
• The overall market has been profitable, with the
results of local reinsurers consistently lagging
Brazilian Market Results – Combined Ratio
130%
122%
110%
90%
90% 91%
96%
94%
99%
106%
104%
93%
109%
101%
87%
92%
90% 91%
70%
50%
30%
10%
-10%
2010
2011
Overall Local Market
Source: TerraReports – Terra Brasis Resseguros
2012
IRB
2013
Other Local Re's
2014
PROSPECTS FOR BRAZIL
• While the economic environment may be more
challenging due to slower GDP growth, the
fundamentals supporting the Brazilian insurance
market remain positive:
‒ 5th largest economy by 2030, up from 7th today
‒ 8th largest insurance market by 2020, up from
12th today
‒ $1bn in profit by 2020 for the direct
commercial market
Source: IMF< Lloyd’s, KPMG, PWC
BRAZILIAN COMPANIES OVERSEAS
• Brazilian investment abroad requires insurance
partners with global capabilities
‒ Languages
‒ Licences
‒ Cultures
• Lloyd's, with its large network of local licences
and global experience, can be this partner
• Brazilian investors already are helping develop
Lloyd’s and Brazil
CLOSING REMARKS
• The Brazilian insurance market remains
attractive
• Foreign market participants remain a key
partner in developing Brazil’s insurance sector
• Consortia enable Lloyd’s and managing agents
to provide the Brazilian market with greater
capacity and risk transfer expertise
London
Darren Powell
Senior Vice President
Active Underwriter, Syndicate 2232
[email protected]
+44 207 220 0667
CONTACTS
Miami
Paul Obolensky
Senior Vice President
Underwriting Operations
[email protected]
+1 (786) 362-8012
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LLOYD’S BRAZIL
Marco Castro
© Lloyd’s 2012
Perfil de Negócios
Lloyd’s Brasil Prêmios e Sinistralidade
2014 Mercado Brasileiro de Resseguros
(Ranking Lloyd’s vs Resseguradores Locais)
(Prêmios em milhões de US$)
(em milhões de US$)
IRB
Prêmio
1,077 (35%)
Sinistralidade
322 (10%)
242 (8%)
ZURICH
112%
349
314
298
322
255
72%
193
164
58%
55%
44%
Cresc.
2009
18%
2010
32%
2011
17%
2012
17%
2013
-10%
2014
3%
177 (6%)
AUSTRAL
133 (4%)
MUNICH
119 (4%)
MAPFRE
39%
21%
2008
ALLIANZ
103 (3%)
SWISS
85 (3%)
ACE
75 (2%)
J.MALUCELLI
Outros Locais
61 (2%)
134 (4%)
Outros Admitidos
& Ocasionais


Lloyd’s Brasil teve um modesto crescimento de
3% em 2014.
Sinistralidade aumentou para 58%, indicando

uma deterioração nas condições de mercado.
Source: Market Intelligence calculations on Xchanging
Resseguradores
Locais
566 (18%)
Admitidos
& Ocasionais
Lloyd’s continua sendo o maior ressegurador
internacional no Brasil e 2º depois do IRB.
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Sindicatos com presença local
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Sindicatos com presença local
2008 – 2014 Prêmio Lloyd’s Brasil
(Em milhões US$)
349
314
298
322
255
56%
193
164
141
Lloyd’s Total
107
73
Sindicatos com
presença local
118
79
44%
41
10
2008
2009
2010
2011
2012
2013
2014

Os sindicatos com presença local tem crescido consistentemente desde 2008.

Os sindicatos com presença local representaram 44% do prêmio total do Lloyd’s
em 2014.
Source: Market Intelligence calculations on Xchanging
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Sindicatos com presença local
2008 – 2014 CAGR
(Taxa de crescimento anual composta)
(Em % do prêmio)
Lloyd's
12%
Sindicatos com
presença local
Sindicatos sem
presença local
Mercado de
Resseguro

55%
3%
9%
Forte crescimento dos sindicatos do Lloyd’s com presença local no Brasil.
Source: Market Intelligence calculations on Xchanging and SUSEP
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Responsabilidade Social Corporativa
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